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India – Labour market too rigid, says Randstad

08 March 2013

The Chairman of Randstad India said the country’s recruitment industry is still in its early stages and lags behind the more developed staffing markets in Europe and North America. In an interview with Hindu Business Line, Paul van de Kerkhof said this was down to India not having sufficient flexible labour policies in place.

“The age of the HR industry in India is about ten years. It is in a very early stage of development when compared to the US or the UK where it is nearly 50-years old. The penetration of staffing in India is 0.1% while in advanced markets it is 3-5% of the total population,” said Mr Paul van de Kerkhof, who was appointed to chairman in India earlier this year.

He argued that Indian labour laws are too rigid. “You do not have a flexible labour policy in the country. It is easy to hire but difficult to demobilise.” This comes after the International Confederation of Private Employment Agencies (Ciett) this week called on the Indian government to modernise its labour market and regulate the local staffing industry.

The Randstad chairman said that rigid labour markets have more difficulties recovering from a downturn. “The labour market should be made more flexible. Today, the industry has too many constraints. For example, when we have to recruit a flex or temp worker, there are too many licensing norms we have to go through, which makes the cost of doing business expensive,” he said.

But he said Randstad was in India for the long term. “We have big operations here and the potential is big.” The staffing market has also become more competitive. “Ten years ago, it was us, Adecco and Manpower. Today, there is competition from every direction, including online and small players.”

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